Obama pushes financial reform in NYC

From NBC's Athena JonesPresident Obama returned to Cooper Union Thursday to make the case for changing the rules governing Wall Street firms in order to better protect both consumers and investors and to avoid another financial collapse.

In his 2008 speech here, then candidate Obama argued that because the financial industry had evolved, a "21st Century regulatory framework" with new rules of the road was needed to adequately protect the system and restore confidence in the markets. In making the same argument today, he touched on one of his common themes: responsibility.

"One of the most significant contributors to this recession was a financial crisis as dire as any we've known in generations -- at least since the '30s and that crisis was born of a failure of responsibility -- from Wall Street all the way to Washington -- that brought down many of the world's largest financial firms and nearly dragged our economy into a second Great Depression," he said. " Some -- and let me be clear, not all -- but some on Wall Street forgot that behind every dollar traded or leveraged there's family looking to buy a house, or pay for an education, open a business, save for retirement. What happens on Wall Street has real consequences across the country, across our economy."

White House officials have repeatedly painted the battle for improved financial rules as a fight to protect ordinary Americans against big firms who take risky bets that put the entire economy at risk. Officials argue that Republicans who oppose reforms are fighting on the side of banks instead of for the interests of the American people.

Democrats on the Hill also gained momentum from the U.S. Securities and Exchange Commission's announcement that it was suing Goldman Sachs for fraud. And in recent days, GOP leaders have signaled a willingness to work with Democrats on the bill, which could come to the floor next week.

Today in New York, the president touted the decisions his administration had made - many of them unpopular -- to try to put the brakes on the economic freefall and said that while businesses were now adding jobs again, there was still more work to do to make sure progress was felt "not just on Wall Street but on Main Street." He urged Wall Street to back changes he believes will strengthen the system, rather than fighting them.

"Our markets are only free -- when there are basic safeguards that prevent abuse, that check excesses, that ensure that it is more profitable to play by the rules than to game the system and that is what the reforms we've been proposing are designed to achieve -- no more, no less," he said. "We will rise or we will fall together as one nation and that is why I urge all of you to join me. I urge all of you to join me, to join those who are seeking to pass these commonsense reforms."

Obama also touched on the Volcker Rule, which would limit the size of banks and kinds of risks they can take and say on pay rules that would give investors and pension holders a stronger role in deciding compensation at big firms.

The roughly 700 people in the audience at the college included members of the President's Economic Recovery Advisory Board like Paul Volcker, labor leaders, elected officials like Gov. David Paterson and Mayor Mike Bloomberg, consumer advocates and leaders from the financial industry, including Goldman Sachs CEO Lloyd Blankfein and NASDAQ CEO Bob Griefeld.

The House of Representatives passed a comprehensive overhaul of financial regulations last year and the Senate is poised to take up its version of legislation in the coming days that would, among other things, regulate the highly profitable derivatives market, end future taxpayer-funded bailouts, give the federal government resolution authority to unwind a failing firm without putting the entire system at risk, require large firms to have more capital on hand and less debt and create a new consumer protection agency housed in the Federal Reserve.